Retail Dude

The title of the article has been borrowed from the article found at Knowledge@Wharton, Which helped me answer some of the questions running in my head regarding the complex consumer class in India, The statistics are right about India, its our third consecutive year at the top of GRDI and our consumer goods market is expected to reach $400 Billionby 2010, but we are the same consumer class, who have readily accepted the 100 bucks pop corns at PVR’s but bargain with the auto wallah on our way. We are the same class who have far exceeded any one’s expectation in the mobile market but still have the least mobile Internet penetration, The question is simple: How to capture this complex consumer class?

The article suggests that although the attitude is shifting towards consumerism, being individually poor but collectively rich is what differentiate India from rest of the world, with a large part of the population living below the mark of $1 per day, India still holds a tremendous untapped middle market, and this is what we all will agree to! Its our population which has turned out to be a boon for us, be it the outsourcing mania or now retailing, its the numbers which is making the heads turn towards India!

We can notice the changing trends, as more and more families gain economic independence because of the continued industrialization of the country, the focus of the consumer is shifting from the basic amenities like food and clothing to more advanced consumptions like mobiles and health care, but to capture these markets, retailers need to adopt to strategic mix of pricing and values, as we still are guided by both. A casual surf around landed me at the case of Ram Das Mohan Lal Maheshwari which has strategically crafted this proposition of both price and values, thus firming up the belief. The store, established 60 years back, has over the time offered an optimum mix of price and values, Which so far has skipped out of the hands of the new organized retailers, but this doesn’t necessarily means that the organized retailing is entirely at fault. Rising real estate pricing, and fresh money in the hands of the young consumers have made the numbers go wrong.

Although, Pricing and Values are a sure shot strategy of winning this question, the article suggests that recent researches have shown that the Indian consumer is fast shifting over to the products which are relevant to there experience, As Rajeev Karwal has cited in the article:

“Karwal cited the mobile phone as an example of a product that offers a high degree of functionality at a good price. “It is equipped with features such as a dust-resistant keypad and a built-in flashlight that not only aid truck drivers on India’s poorly lit highways, but also take away the villager’s embarrassment over the lack of electricity. Customized to the Indian market and reflecting the importance of price and value rolled into one, the mobile phone now serves as a great benchmark for market penetration. It is no wonder that the number of mobile phone subscribers far outweighs the number of Internet or credit card users in India”

So, its still a war out there, between pricing and values, and now a different virtue - Experince, Which is although new to a majority of Indian Consumers, but is fast catching up!

India stands as a challenge to all to management theories, I have the numbers, do you have the strategy?

- Sarthak

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Global Retail opportunity:

As we keep hearing that there is a great opportunity for Global Retailing in news, blogs, reports etc etc.. It uses to confuse me that how is it possible??? With subprime losses in US, Inflation in Asian market, and consternation in other major markets like Japan, Europe etc. where does this opportunity lie exactly?? But then I came across a report by A.T. Kearney, “Emerging Opportunity for Global Retailers”, which helped me to understand it thoroughly. The report says that since US retailers are suffering from lower same store sales in their home market, they need to move out in order to ensure growth. Now the question is where to grow. If we see Asia market, though weak dollar has triggered inflation here as most of the emerging economies here have large reserves in dollars. But still there overall growth has not been endangered. This is evident from the fact that GDP in emerging economies like India, China, Russia is still expected to top 8% in 2008. And in most of these economies less than 10% of the Retail is organized. This is another opportunity for Global retailers.     

Window of Opportunity theory: The theory says that before the window of opportunity opens, investments in a new market may receive a setback due to uninterested crowd, political regulations and incapable supply chain. But in some time the government realizes the power of organized retailing and reduces regulations, consumers’ starts appreciating the formats and services, and ancillary industries like 3PL starts flourishing. After this Window op Opportunity closes as regulations become lenient and most of the global retailers have already entered the market and have capture best real estate as well as favorable place in consumers mind. So, the Retailers who capture market before opening of the window become superior in such markets. And the opportunity cost is higher for the retailers who enter at the later stage.  Moreover by the time of opening of window, domestic retailers also realizes the opportunity and so late entrants have to face a stiff competition from them too. This Window of Opportunity is comprised of four stages, opening, peaking, declining & closing. Most of the emerging economies like India, China, Saudi Arabia etc lie in Opening and Peaking stage reflecting the Great Global Retail Opportunity.

Ref:  A.T. Kearney, “Emerging Opportunity for Global Retailers” [2008]

-Rajeev Damani.

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